Emerging gas developer Leigh Creek Energy (ASX: LCK) has completed the decommissioning of its syngas pre-commercial demonstration (PCD) plant in South Australia, paving the way for the company to start commercialising the project.
Leigh Creek Energy hailed the pilot plant a “great success” in February after it proved the production of synthesis gas, or ‘syngas’ via in-situ gasification (ISG) could be achieved at commercial levels. ISG is the chemical process of converting coal to a gaseous form.
The company then commenced the decommissioning stage of the plant in April, ceasing operations and shutting down and preserving the plant and equipment.
In an update today, it said a monitoring regime has commenced with no reported environmental impacts or safety issues occurring from the PCD within its zone of operation to-date.
Leigh Creek Energy managing director Phil Staveley said the successful shutdown of the PCD plant has allowed the company to minimise expenditure as it moves to the next phase to monetise the large gas reserve.
According to the company, operating expenses have reduced by about $500,000 per calendar month since the shutdown of the plant.
Meanwhile, the company has been progressing commercial talks with potential joint venture partners and gas sales customers.
These discussions were further bolstered by the reclassification of the project’s 2C contingent resource to a 2P (proven and probable) gas reserve of 1,153 petajoules in March.
This maiden reserve estimate confirmed the project as one of the biggest undeveloped and uncontracted gas reserves in eastern Australia.
In today’s announcement, Leigh Creek Energy said commercial negotiations for a potential joint venture and project finance have advanced to a “more mature stage” with meetings held in Hong Kong and Beijing over the last two weeks, following reviews of the independent reserve report and PCD production data.
In addition, commercial discussions for gas sales agreements are continuing, the company reported.
“We have been very encouraged by recent negotiations on both gas sales agreements and joint venture partners,” Mr Staveley said, noting that these agreements’ dollar values were “in the billions”.
“As such, negotiations and discussions by their very nature are protracted and thorough.”
“At the moment, we are in advanced discussions with three large, reputable and bankable parties and look forward to being able to make an announcement on this in due course,” he added.
Leigh Creek Energy has chosen a dual commercial pathway for its syngas project, involving the production of high-value ammonium nitrate products such as fertiliser and industrial explosives and potentially, domestic natural gas sales.